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ELECTRONICALLY
DAVID H. SCHWARTZ (SBN 62693)
1 NANCY CHUNG (SBN 225584) F I L E D
LAW OFFICES OF DAVID H. SCHWARTZ, INC. Superior Court of California,
2 423 Washington Street, Sixth Floor County of San Francisco
San Francisco, CA 94111 06/10/2020
3 Tel: (415) 399-9301 Clerk of the Court
Fax: (415) 399-9878 BY: SANDRA SCHIRO
4 E-mail: dhs@lodhs.com; nchung@lodhs.com Deputy Clerk
5 Attorneys for Cross-defendant JOHN LITZ
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
7 COUNTY OF SAN FRANCISCO
UNLIMITED JURISDICTION
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Case No.: Case No.: CGC-19-581427
9 FFG RESTAURANT GROUP, INC. and
FORWARD FOOD GROUP, LLC, DECLARATION OF CROSS-
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DEFENDANT JOHN LITZ IN
11 Plaintiffs, OPPOSITION TO DEFENDANT AND
CROSS-COMPLAINANTS LAURA
12 vs. OZYILMAZ AND SAYAT OZYILMAZ’S
13 MOTION TO COMPEL
SAYAT OZYILMAZ, LAURA GABRIELA MEDIATION/ARBITRATION AND TO
14 OZYILMAZ, FFG RESTAURANT GROUP, STAY CLAIMS
Inc., a California Corporation, and DOES 1
15 through 100, inclusive, Date: June 23, 2020
16 Time: 9:30 a.m.
Defendants. Dept: 302
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________________________________________
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LAURA OZYILMAZ and SAYAT OZYILMAZ,
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20 Cross-Complainants,
21 vs.
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JOHN LITZ, FORWARD FOOD GROUP,
23 LLC, FFG RESTAURANT GROUP, INC.,
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YONGJIA SOLLERS, and ROES 1
THROUGH 30;and ROES 1 THROUGH 30,
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Cross-Defendants.
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27 I, JOHN LITZ declares as follows:
DECL. OF JOHN LITZ ISO OPPO. TO MOT. TO COMPEL ARBITRATION/MEDIATION
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1. I am the Plaintiff and a named Cross-Defendant in this litigation. I am above the
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age of majority. If called as a witness I could testify to the matters stated herein of my own
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knowledge except for such matters as are stated to be based upon my information or belief.
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2. In December of 2017, I orally offered Defendants and Cross-Complainants Laura
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Ozyilmaz and Sayat Ozyilmaz to be employed as Executive Chefs by FFG Restaurant Group for
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a new restaurant I was seeking to start up. The offer included terms of their employment at will
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along with a schedule for vesting of up to 40% of the issued common stock of FFG Restaurant
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Group, Inc. over time, subject to their continued employment. In my presence, they each orally
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assented to the terms I proposed except that they asked for the right to vest in up to 50% of the
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stock, which change I orally agreed to.
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3. Despite what I understood was our oral agreement, Defendants and Cross-
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complainants never signed agreements that were prepared in early 2018 reflecting the terms of
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our discussion, although Sayat Ozyilmaz repeatedly assured me through most of 2018 that he
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and Laura Ozyilmaz would sign them.
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4. In late October 2018, Mr. Ozyilmaz informed me they did not agree to the terms
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set forth in the written agreements they had been provided early in that year. Throughout 2018,
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while the restaurant premises were being remodeled and set up for operation, there was repeated
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acrimony in the interactions between me and Defendants and Cross-complainants, often to the
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point that I had to stop communicating with Defendants and Cross-complainants.
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5. In December 2018 I agreed with Defendants and Cross-complainants to attempt to
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negotiate a set of written agreements to settle the terms under which they would be employed,
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become joint owners with me in FFG Restaurant Group, Inc., our respective responsibilities for
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the management of the restaurant, and the manner in which we would interact. We agreed we
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would retain lawyers to do the negotiating. There was shared concern that the restaurant was
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close to being completed and ready to open, and both Defendants and Cross-complainants and I
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were anxious that opening of the restaurant not be delayed while we struggled to reach
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agreement on all the terms. In a letter dated December 19, 2018 from my counsel, Michael
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Schinner, to Carolyn Tawasha, counsel for Defendants and Cross-complainants, proposing
DEC OF JOHN LITZ IO MOTION TO COMPEL MEDIATION/ARBITRATION -- 2
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various terms for inclusion in the formal agreements, it was stated: “Please review the above
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terms with your clients and give me a call at your earliest convenience to discuss. If the
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foregoing is satisfactory, the parties can sign an MOU and immediately being [sic] preparation to
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open the doors of Noosh, while the lawyers finalize the legal documents.” A copy of that letter,
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which is in my possession, is attached to this Declaration as Exhibit A.
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6. Ms. Tawasha, in a letter to Mr. Schinner dated December 31, 2018, reiterated the
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concept of the parties signing an MOU while formal documents were being prepared. A copy of
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that letter, which is in my possession, is attached to this Declaration as Exhibit B.
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7. The MOU attached as an exhibit to the Declaration of Lucinda Storm in Support
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of Defendants’ and Cross-complainants’ Motion to Compel mediation/arbitration was signed by
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me on February 18, 2019 and by the Defendants and Cross-complainants on February 19, 2019.
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At the time the MOU was signed, none of the documents referred to in the MOU had been
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finalized. While at least one of the proposed but unfinalized formal agreements, the
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Shareholders’ Agreement, contained an arbitration clause, no arbitration clause was included in
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the MOU that was signed, nor would I have agreed to arbitrate the MOU had such been
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proposed, as I understood it did not have any binding effect as to the terms of the agreements
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referenced in it that were to be entered into “in substantially the form attached,” nor could it have
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any binding effect as to the additional anticipated employment agreements where that language
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meant any term could be subject to change. Moreover, the Confidentiality and Invention
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Assignment Agreements, and Intellectual Property Assignment Agreements referenced in the
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MOU as of the date of signing had not even been drafted and presented to the parties.
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8. After the MOU was signed the restaurant opened, but I never signed any of the
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agreements referenced in the MOU in any form. To my knowledge Defendants and Cross-
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complainants never signed any of the agreements referenced in the MOU in any form
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9. I understood the MOU was intended merely as a demonstration of good faith that
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the Defendants and Cross-complainants and I were intent on reaching formal agreements to
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govern terms of employment, ownership, management relations, respective responsibilities, and
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other issues. Shortly after the MOU was signed my relationship with Defendants and Cross-
DEC OF JOHN LITZ IO MOTION TO COMPEL MEDIATION/ARBITRATION -- 3
1
complainants again turned highly acrimonious. Defendants and Cross-complainants quickly
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accused me of violating the terms of the MOU while I asserted to them that they were violating
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the terms of the MOU. It was quickly apparent to me that when the MOU was signed there had
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been no meeting of the minds as to the terms of the agreements we had agreed to try and finalize,
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or even the terms set forth in the body of the MOU itself.
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7 I declare that the foregoing is true and correct. Signed under penalty of perjury in San
8 Francisco, California, on June 10, 2020.
9
10 _____________________________________
JOHN LITZ
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DEC OF JOHN LITZ IO MOTION TO COMPEL MEDIATION/ARBITRATION -- 4
EXHIBIT
A
96 JESSIE STREET
SCHINNER & SAN FRANCISCO, CA 94105
TEL 415-369-9050
FAX 415-800-1094
SHAIN, LLP SCHINNER@SCHINNER.COM
File No. 3558-1
Confidential Settlement Communication – Not Admissible as Evidence
VIA ELECTRONIC MAIL: ctawasha@kaytawasha.com
Carolyn J. Tawasha, Esq.
829 Clay Street
Oakland, CA 94607
Re: FFG Restaurant Group, Inc. (“FFG”)
Dear Carolyn:
Following up our recent telephone conversation, I have summarized the key points of a
proposal that would create a workable corporate structure and allow Noosh to open its doors in
early 2019. As you suggested, if FFG were to elect statutory “close corporation” status, we
could keep much of the existing corporate and capital structure in place, yet provide a more
flexible and functional dynamic in terms of the management of the company. Specifically, we
propose the following:
Management Structure
1. FFG becomes a statutory close corporation in which John and Sayat will be the operating
managers (“Management Committee”) responsible for all decisions normally reserved
for the Board.
a. John and Sayat will have equal voting rights. All decisions of the Management
Committee will require unanimous consent, other than those that fall within the
ambit of the day-to-day decisions of John (CEO and front of the house) and
Sayat/Laura (kitchen). The close corporation structure would remain in place for
so long as all three shareholders (John, Sayat and Laura) remain employed in the
company and own stock in the company.
b. We will need to designate a tie-break person and procedure to avoid potential
deadlock on the Management Committee.
c. To become a close corporation, the Articles will have to be amended, stock
certificates legended, and a shareholders’ agreement entered into.
2. The board of directors will remain the same: John, Sayat and Laura.
3. The officers will remain the same--John (President and CFO), Laura (Secretary)--and
Sayat will be appointed Vice President.
Letter to Carolyn J. Tawasha, Esq.
Page 2 of 3
Capital Structure
1. John has already paid for his $50,000 shares (@0.001 per share), and those shares
are fully vested. John has too much at stake, including his home as part of the
Lease guaranty, to leave before Noosh reaches financial success.
2. Sayat and Laura will be issued 25,000 shares each at the same price that John
paid. 5,000 shares each will vest immediately upon execution and the balance of
the shares will commence vesting June 1, 2018, with a one-year cliff and monthly
thereafter for three years.
a. We recognize that Sayat and Laura potentially have serious tax issues as a
result of them not having made a Section 83(b) election. (The closing of the
LLC unit offering—which is the only arm’s length valuation we have-- put
the post-money valuation of Noosh at nearly $5 million.) Nevertheless, I
believe we can resolve these tax issues favorably and John is willing to work
with Sayat and Laura to achieve this objective.
3. FFG has the right to repurchase any unvested shares at the original purchase price
in the event of Sayat and/or Laura’s termination of employment. FFG will also
have the right to purchase any vested shares at fair market value. John does not
agree to give Sayat and Laura a right of first refusal on each other’s shares in the
event of termination, as this could create an unintended consequence where one
spouse leaves his or her employment shortly after execution, yet the ownership
percentage remains the same. On the other hand, if one spouse’s employment
terminates due to death or permanent disability, John would agree that the
remaining employed spouse could have a right of first refusal over the shares.
Intellectual Property
1. John (individually) owns the IP related to Noosh, including the trademark.
John will license this IP to the LLC to use on a royalty-free basis as long as
the restaurant operates. John is free to open additional Noosh restaurants;
as long as Sayat and Laura are employed by the original Noosh, they will
have the right to participate on an equal basis provided that they contribute
towards the opening of future location. If and when their interest in FFG
terminates, their positions and any equity in the future locations will
immediately cease.
2. Sayat and Laura own the IP related to Kitchen Table, including the trademark.
However, in recognition of the fact that, to date, the Kitchen Table concept has been
developed using the LLC’s funds, Sayat and Laura will license this IP to the LLC to
use on an exclusive, royalty-free basis as long as the restaurant operates. This means
that when they are stock in Noosh, they cannot use the Kitchen Table concept in any
restaurant venture outside of the Noosh restaurant; provided, they may exploit the
Kitchen Table IP in other channels (e.g., books, media, etc.) as long as such activities
do not interfere with the performance of their duties to FFG and provided further that
Letter to Carolyn J. Tawasha, Esq.
Page 3 of 3
all proceeds with such activities are assigned to Noosh. In other words, they will be
subject to a noncompetition provision during their employment with Noosh. If either
Sayat or Laura’s ownership in FFG terminates, they will be free to open Kitchen
Table restaurants (subject to a reasonable geographic limitation to be agreed upon by
the parties) and retain all proceeds therefrom.
3. As part of their stock issuance, Laura and Sayat will provide and license to FFG all
recipes and know-how needed to produce and execute the Noosh menu for so long as
the restaurant operates.
Employment
1. Employment Agreement -- Each owner (John, Laura and Sayat) will sign an
employment agreement.
2. Job Responsibilities – The duties outlined in your revised Shareholders’ Agreement
are generally acceptable.
3. Salaries -- Recognizing that Noosh is a start-up with the stated goal of returning
investor funds as quickly as possible, starting salaries will be $60k each for John,
Laura and Sayat, respectively, with a bonus structure to be worked out by the
Management Committee if certain milestones are hit (both on the culinary and
business sides).
4. Termination – The company will not have the right to terminate partner-employees at
will, but it can terminate for “cause” (standard language including unlawful,
dishonest deeds, failure to follow direction of Management Committee, etc., and
failure to cure after written notice).
5. Activity Outside of Business -- Partners free to engage in outside activities provided
there is no conflict of interest or competing activity and does not interfere with the
performance of duties.
* * * *
Please review the above terms with your clients and give me a call at your earliest
convenience to discuss. If the foregoing is satisfactory, the parties can sign an MOU and
immediately being preparation to open the doors of Noosh, while the lawyers finalize the legal
documents.
Yours sincerely,
Michael G. Schinner
Enclosures
cc: John Litz
EXHIBIT
B
CAROLYN J. TAWASHA PC.
ATTORNEY AT LAW
Kay & TawasHa LLP
829 CLAY STREET
OAKLAND, CA 944607
ctawasha@kaytawasha.com (510) 8388-3275
December31, 2018
VIA EMAIL & US MAIL
Mr. Michael Schinner
SCHINNER & SHAIN, LLP
96 Jessie Street
San Francisco, CA 94105
schinner@schinner.com
Re: FFG Restaurant Group, Inc. (“FFG”)
Dear Michael:
I have reviewed yourletter dated December 19, 2018 and the proposals contained therein with
my clients. This letter is our response in an effort to resolve the major outstanding issues raised
in yourletter. It is not an attempt to address all relevant matters. Please be advisedthat this
constitutes a confidential settlement communication and is not admissible as evidence.
For simplicity, the headings below are consistent with yourletter. Reference to the Shareholder
Agreementis to the Shareholder Agreement drafted by FFG’s attorney Roberta Econamidis and
as revised by me and sent to you on November28, 2018.
Management Structure:
1, Laura and Sayat agree that the most practical structure for addressing management of
FFGis to convert the companyinto a statutory close corporation and appoint a Management
Committee, which will be responsible for decisions normally reserved for the Board of Directors.
The Management Committee will have authority to act informally.
2. The members of the Management Committee will consist of the same persons who are
Directors of the corporation. Directors will be appointed as set forth in the Shareholder
Agreement per the terms drafted by Roberta. Accordingly, the members of the Management
Committee will be John, Sayat and Laura. If for any reason, there are fewer than three
shareholders, and consequently fewer than three Directors, the Management Committee will be
constituted based on the number of remaining Directors. Sayat and Laura are not prepared to
relegate Laura to a non-voting shareholder because John has determined he cannot work with
her. Instead, decisions will be made by a majority vote of Management Committee members,
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Mr. Michael Schinner
December 31, 2018
Page 2
although Sayat and Laura are prepared to provide that John must be one of the two members
approving a decision so as to avoid his being outvoted by them.
3. The shareholder agreement will be generally based on the last draft of the Shareholder
Agreement with added language addressing the Management Committee structure and any other
revisions agreed bythe parties.
4, Wedo not see how a “tie-breaker” designate will work for all purposes regardless of the
issue at hand, but please propose someoneso we can evaluate this more effectively and from a
practical perspective.
5. Authority of the individual members/officers/shareholders to make day-to-day decisions
would need to be refined to some extent and should betied to the shareholders’ respective duties
as outlined in the schedule attached to the Shareholder Agreement. It appears John has agreed to
those duties as identified. The items under Section 7 of the Shareholder Agreementas requiring
approval of 75% of the shareholders would instead require a majority vote of the Management
Committee, even if those items are otherwise identified under an individual shareholder’s duties.
Laura’s and Sayat’s authority would include back of house butthe parties should also discuss
front of house given that Laura and Sayat have assumed someof these responsibilities and John
is not expected to be working in the restaurant on a full-time basis.
6. The Officers would be as follows: John, CEO and CFO; Sayat, Vice-President, Laura,
Secretary.
Capital Structure:
1, Laura and Sayat are prepared to also pay $.001 per share, $50 or $25 each, for each of
their 25,000 shares. However, as I have indicated both in my revised draft of the Stock Purchase
Agreement and to Roberta, I believe a total capitalization of $100 is too low and subjects the
shareholders to potential individualliability based on undercapitalization. I would recommend a
minimum of $3,000 to at least coverinitial attorney’s fees and accounting and tax expenses;
Laura and Sayat are willing to pay $750 each for their shares.
2. Like John, Laura and Sayat have a great deal at stake in this venture. They personally
guaranteed the Forward Food Group, LLC lease for its restaurant premises in addition to various
vendor agreements, they significantly reduced the activities of their successful business in April
2018, have put that business completely on hold since August, 2018 and have each been
devoting at least eighty hours a week for the last five months towards developing the concept,
recipe and menu development, logistics, licensing and permitting, hiring and training, promotion
and pre-openingactivities, not to mention their full-time and other efforts prior to that. For
vesting purposes, they are willing to accept 5,000 shares each immediately, with 5,000 per year
vesting monthly (per the terms drafted by Roberta in the Shareholder Agreement) commencing
February 2, 2018, the day the restaurant lease was signed and they began their work for FFG and
the restaurant in earnest. They will not agree to a one-yearcliff.
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Mr. Michael Schinner
December 31, 2018
Page 3
3. While we disagree with your “post-money valuation” of $5 million for FFG, becausethis
moneywas raised for the restaurant entity among other reasons, I agree that we should be able to
resolve the related tax issues so that Sayat and Laura can take advantage of a Section 83(b)
election.
4, Laura and Sayat would agree to the buy-out terms as outlined under item 3 of vourletter.
5. Westill need to understand the ownership interests of Forward Food Group, LLC and
how FFG’s interest was affected by the additional capital raise conducted by John.
Intellectual Property:
1, The proposal outlined in yourletter dated December 19, 2018 does not appear to be made
in good faith. As John knowsand understands, the parties always intended that FFG would own
the ““Noosh” intellectual property, including the trademark and trade names, recipes and menus.
This was all developed on a collaborative basis with my clients devoting significant time and
efforts to do so. As explained to me by Roberta, Sayat and Laura wereoriginally going to own
equivalent fully vested interests in Forward Food Group, LLC and each newrestaurant entity
formed under the concept so long as they continued to be involved, but the parties instead agreed
that they would owna vesting interest in the entity which ownsthe intellectual property. There
is no basis upon which they would agree to grant John ownership of the concept theyall
developed together and accept a vesting interest they would otherwise have received as a fully
vested interest.
2. Likewise, the “Kitchen Table” concept, including the trademark and trade name, recipes
and menus developed for the restaurant should be owned by FFG.
3. All intellectual property owned by FFG will be subject to Sayat’s and Laura’s rights in
their pre-existing property and intellectual property they develop outside of their work for FFG.
Note that this is consistent with the terms of the Forward Food Group, LLC operating agreement.
Weproposed language under Section 8 of the Shareholder Agreement addressing Sayat and
Laura’s rights to pre-existing intellectual property. You expressed some concerns, so I am
proposing revised language here given that resolving this issue is crucial to resolving any
outstanding issues amongthe parties:
“A Shareholder may not, at any time either during the term of this Agreemert or
thereafter, directly or indirectly furnish or divulge to any person, firm, or
corporation whatsoever, except as may be necessary for the fulfillment of
Shareholder’s duties as an employee and officer of the Corporation, the names of
any customer or customers of the Corporation or the methods of conducting the
business of the Corporation. In addition, a Shareholder may not disclose any
confidential information to any person, firm, or corporation whatsoever, imparted
to a Shareholder in connection with employment of the Shareholder by the
LS_Doc_0981
Mr. Michael Schinner
December 31, 2018
Page 4
Corporation. Finally, subject to the terms hereof, a Shareholder may notuse fer its
own benefit any confidential information imparted to a Shareholder in connection
with employment of the Shareholder by the Corporation or any ofits Affiliates.
The parties acknowledge and agree that Sayat and Laura have and will incorpcrate
into the “Noosh” and “Kitchen Table” concepts (collectively the “Concept”)
various pre-existing knowledge, concepts and other intellectual property or
proprietary information, including, without limitation, menus, recipes, methodsfor
food preparation and service and staffing models used in connection with their
trademark and trade name “Jstanbul Modern,” cultural and social formats,
ingredient profiles, ingredient combinations, know-how, techniques, methods,
compilations, sources, ideas, designs and other general knowledge(collectively, the
“Pre-Existing IP”). The Corporation agrees that Sayat, Laura and/ortheir affiliates,
as the case may be,are the sole and exclusive owners of the Pre-Existing IP, retain
all rights, titleand interest to the Pre-Existing IP and are free to use, explo‘t or
dispose of such Pre-Existing IP, in whole or in part, in any way as they may desire,
including, without limitation, in restaurants or other businesses that use adaptations
of recipes or menusincorporated into the Concept. Notwithstanding the foregoing,
Sayat’s and Laura’s ownership and use of the Pre-Existing IP, (a) shall not
materially adversely affect the business of the Restaurant or any other restaurants
using the Concept managed by the Corporation or its Affiliates, (b) shall not
materially adversely affect Sayat’s and Laura’s ability to perform their Services
while they are Shareholders of the Corporation, (c) shall not include the same
menusas those developed for the Concept, and (d) shall not materially adversely
affect the Corporation’s ownership of the Conceptor prevent the Corporation from
using Confidential Information developed by Sayat and Laura in connection with
the Services they render for the Corporation to develop the Concept even if such
Confidential Information is similar to the Pre-Existing IP.”
4. The foregoing should address John’s concerns regarding FFG’s ownership of the Concept
and related restrictions. Sayat and Laura will not agree to a non-competition agreement, whichis
inconsistent with the terms of the Forward Food Group, LLC operating agreement in any event.
5. A license agreement for the Noosh and Kitchen Table concepts granting Forward Food
Group, LLC the right to use them needsto bein place.
Employment:
l. Assuming the terms of the employment agreementare consistent with the terms in the
Shareholder Agreement, Laura and Sayat would be willing to consider havingall three parties
sign employment agreements.
2. Sayat and Laura agreedto initial salaries of $60,000 in order to keep the initial opening
capital budget forthe first restaurant low and based on the prospect that they would be opening
additional Nooshrestaurants relatively quickly and receiving salaries from those locations. If
LS_Doc_0981
Mr. Michael Schinner
December31, 2018
Page 5
cash flow from the restaurant can sustain industry standard salaries, their salaries should
increase. Whileit is everyone’s goal to repay investors as quickly as possible, Laura and Sayat
are not prepared to workin the restaurant indefinitely for a salary of $60,000 each. In the past
whenthe budget and cash flow did not permit, they discouraged John from starting salaries for
the three of them and they have received nosalaries to date; they are obviously not interested in
jeopardizing the viability of the restaurant if cash flow does not permit an increase. The issue of
past salaries and other compensation owedfor private events, as agreed by the parties, still needs
to be addressed and resolved. A reasonable interim base salary for each Chef once the restaurant
can sustain it would be $80,000 plus bonuses, whichis still below prevailing rates. Once
restaurant cash flow permits, their salaries would then increase to industry standard. Thatsaid,
salaries should be tied to actual services performed in and for the restaurant. If they take on more
of a supervisory role as the concept expands, salaries payable by the initial restaurant and each
affiliate would be adjusted accordingly. Likewise, if John outsources his services, his salary
should also be adjusted so the restaurants are not paying twice.
3, The language we provided in Section 5.1 of the Shareholder Agreement defining a
termination “for cause” is acceptable. Given your comments regarding John’s desire to
terminate Laura or Sayat for “insubordination,” your reference to “failure to follow dizection” as
a cause for termination is too broad, particularly if “direction” by the Management Committee is
determined by a “tie-breaker designate.” It has becomeclear that the parties have had a number
of frustrations working together so any standard for termination must be an objective one.
4. Giving the parties the rights to engage in outside activities as you propose in yourletter
appearsto be fine but referencing a “competing activity” is too broad. Using the metric for
Laura’s and Sayat’s use of their Pre-Exiting IP is more appropriate here (i.e. the shareholders’
activities may not materially adversely affect the business of the Restaurant or any other
restaurants using the Concept managed bythe Corporation).
5. I assume yourreference to John’s full and immediate vesting and your references to his
commitmentindicates that he does not wish to include a thirty-six month commitmentbefore a
voluntary termination. This is acceptable (and more consistent with the terms of the Forward
Food Group, LLC operating agreement) providedthe parties give no less than 90 days’ prior
notice. Sayat and Laura wanted certain commitments from John before his interest fully vested
but they would be willing to forgo that in an effort to move the process forward. Despitethis, it
is still important to identify milestones and a reasonable timeline for expansion of additional
units underhis duties, so they can better understand the benefit of having a vesting interest in the
managemententity that ownsthe intellectual property.
Your December19, 2018 letter refers to enclosures. If you intended to include enclosures, please
provide them as soonas possible.
Let me knowif you wish to schedule a time to discuss. In the meantime, please be advised that
myclients are not hereby waiving anyof their rights or remedies, either at law or in equity.
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Mr. Michael Schinner
December 31, 2018
Page 6
If we can come to an agreement and incorporate them into an MOU, I would suggestthat
Roberta draft and revise the relevant documentsstarting with my last draft of the Shareholder
Agreement and Stock Purchase Agreement.
Very truly yours,
.
hf
A
oy
(CV rolynJ. Tawasha
ce: Laura Ozyilmaz
Sayat Ozyilmaz
LS_Doc_0981
Preview
ELECTRONICALLY DAVID H. SCHWARTZ (SBN 62693) 1 NANCY CHUNG (SBN 225584) F I L E D LAW OFFICES OF DAVID H. SCHWARTZ, INC. Superior Court of California, 2 423 Washington Street, Sixth Floor County of San Francisco San Francisco, CA 94111 06/10/2020 3 Tel: (415) 399-9301 Clerk of the Court Fax: (415) 399-9878 BY: SANDRA SCHIRO 4 E-mail: dhs@lodhs.com; nchung@lodhs.com Deputy Clerk 5 Attorneys for Cross-defendant JOHN LITZ 6 SUPERIOR COURT OF THE STATE OF CALIFORNIA 7 COUNTY OF SAN FRANCISCO UNLIMITED JURISDICTION 8 Case No.: Case No.: CGC-19-581427 9 FFG RESTAURANT GROUP, INC. and FORWARD FOOD GROUP, LLC, DECLARATION OF CROSS- 10 DEFENDANT JOHN LITZ IN 11 Plaintiffs, OPPOSITION TO DEFENDANT AND CROSS-COMPLAINANTS LAURA 12 vs. OZYILMAZ AND SAYAT OZYILMAZ’S 13 MOTION TO COMPEL SAYAT OZYILMAZ, LAURA GABRIELA MEDIATION/ARBITRATION AND TO 14 OZYILMAZ, FFG RESTAURANT GROUP, STAY CLAIMS Inc., a California Corporation, and DOES 1 15 through 100, inclusive, Date: June 23, 2020 16 Time: 9:30 a.m. Defendants. Dept: 302 17 ________________________________________ 18 LAURA OZYILMAZ and SAYAT OZYILMAZ, 19 20 Cross-Complainants, 21 vs. 22 JOHN LITZ, FORWARD FOOD GROUP, 23 LLC, FFG RESTAURANT GROUP, INC., 24 YONGJIA SOLLERS, and ROES 1 THROUGH 30;and ROES 1 THROUGH 30, 25 Cross-Defendants. 26 27 I, JOHN LITZ declares as follows: DECL. OF JOHN LITZ ISO OPPO. TO MOT. TO COMPEL ARBITRATION/MEDIATION 1 1. I am the Plaintiff and a named Cross-Defendant in this litigation. I am above the 2 age of majority. If called as a witness I could testify to the matters stated herein of my own 3 knowledge except for such matters as are stated to be based upon my information or belief. 4 2. In December of 2017, I orally offered Defendants and Cross-Complainants Laura 5 Ozyilmaz and Sayat Ozyilmaz to be employed as Executive Chefs by FFG Restaurant Group for 6 a new restaurant I was seeking to start up. The offer included terms of their employment at will 7 along with a schedule for vesting of up to 40% of the issued common stock of FFG Restaurant 8 Group, Inc. over time, subject to their continued employment. In my presence, they each orally 9 assented to the terms I proposed except that they asked for the right to vest in up to 50% of the 10 stock, which change I orally agreed to. 11 3. Despite what I understood was our oral agreement, Defendants and Cross- 12 complainants never signed agreements that were prepared in early 2018 reflecting the terms of 13 our discussion, although Sayat Ozyilmaz repeatedly assured me through most of 2018 that he 14 and Laura Ozyilmaz would sign them. 15 4. In late October 2018, Mr. Ozyilmaz informed me they did not agree to the terms 16 set forth in the written agreements they had been provided early in that year. Throughout 2018, 17 while the restaurant premises were being remodeled and set up for operation, there was repeated 18 acrimony in the interactions between me and Defendants and Cross-complainants, often to the 19 point that I had to stop communicating with Defendants and Cross-complainants. 20 5. In December 2018 I agreed with Defendants and Cross-complainants to attempt to 21 negotiate a set of written agreements to settle the terms under which they would be employed, 22 become joint owners with me in FFG Restaurant Group, Inc., our respective responsibilities for 23 the management of the restaurant, and the manner in which we would interact. We agreed we 24 would retain lawyers to do the negotiating. There was shared concern that the restaurant was 25 close to being completed and ready to open, and both Defendants and Cross-complainants and I 26 were anxious that opening of the restaurant not be delayed while we struggled to reach 27 agreement on all the terms. In a letter dated December 19, 2018 from my counsel, Michael 28 Schinner, to Carolyn Tawasha, counsel for Defendants and Cross-complainants, proposing DEC OF JOHN LITZ IO MOTION TO COMPEL MEDIATION/ARBITRATION -- 2 1 various terms for inclusion in the formal agreements, it was stated: “Please review the above 2 terms with your clients and give me a call at your earliest convenience to discuss. If the 3 foregoing is satisfactory, the parties can sign an MOU and immediately being [sic] preparation to 4 open the doors of Noosh, while the lawyers finalize the legal documents.” A copy of that letter, 5 which is in my possession, is attached to this Declaration as Exhibit A. 6 6. Ms. Tawasha, in a letter to Mr. Schinner dated December 31, 2018, reiterated the 7 concept of the parties signing an MOU while formal documents were being prepared. A copy of 8 that letter, which is in my possession, is attached to this Declaration as Exhibit B. 9 7. The MOU attached as an exhibit to the Declaration of Lucinda Storm in Support 10 of Defendants’ and Cross-complainants’ Motion to Compel mediation/arbitration was signed by 11 me on February 18, 2019 and by the Defendants and Cross-complainants on February 19, 2019. 12 At the time the MOU was signed, none of the documents referred to in the MOU had been 13 finalized. While at least one of the proposed but unfinalized formal agreements, the 14 Shareholders’ Agreement, contained an arbitration clause, no arbitration clause was included in 15 the MOU that was signed, nor would I have agreed to arbitrate the MOU had such been 16 proposed, as I understood it did not have any binding effect as to the terms of the agreements 17 referenced in it that were to be entered into “in substantially the form attached,” nor could it have 18 any binding effect as to the additional anticipated employment agreements where that language 19 meant any term could be subject to change. Moreover, the Confidentiality and Invention 20 Assignment Agreements, and Intellectual Property Assignment Agreements referenced in the 21 MOU as of the date of signing had not even been drafted and presented to the parties. 22 8. After the MOU was signed the restaurant opened, but I never signed any of the 23 agreements referenced in the MOU in any form. To my knowledge Defendants and Cross- 24 complainants never signed any of the agreements referenced in the MOU in any form 25 9. I understood the MOU was intended merely as a demonstration of good faith that 26 the Defendants and Cross-complainants and I were intent on reaching formal agreements to 27 govern terms of employment, ownership, management relations, respective responsibilities, and 28 other issues. Shortly after the MOU was signed my relationship with Defendants and Cross- DEC OF JOHN LITZ IO MOTION TO COMPEL MEDIATION/ARBITRATION -- 3 1 complainants again turned highly acrimonious. Defendants and Cross-complainants quickly 2 accused me of violating the terms of the MOU while I asserted to them that they were violating 3 the terms of the MOU. It was quickly apparent to me that when the MOU was signed there had 4 been no meeting of the minds as to the terms of the agreements we had agreed to try and finalize, 5 or even the terms set forth in the body of the MOU itself. 6 7 I declare that the foregoing is true and correct. Signed under penalty of perjury in San 8 Francisco, California, on June 10, 2020. 9 10 _____________________________________ JOHN LITZ 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEC OF JOHN LITZ IO MOTION TO COMPEL MEDIATION/ARBITRATION -- 4 EXHIBIT A 96 JESSIE STREET SCHINNER & SAN FRANCISCO, CA 94105 TEL 415-369-9050 FAX 415-800-1094 SHAIN, LLP SCHINNER@SCHINNER.COM File No. 3558-1 Confidential Settlement Communication – Not Admissible as Evidence VIA ELECTRONIC MAIL: ctawasha@kaytawasha.com Carolyn J. Tawasha, Esq. 829 Clay Street Oakland, CA 94607 Re: FFG Restaurant Group, Inc. (“FFG”) Dear Carolyn: Following up our recent telephone conversation, I have summarized the key points of a proposal that would create a workable corporate structure and allow Noosh to open its doors in early 2019. As you suggested, if FFG were to elect statutory “close corporation” status, we could keep much of the existing corporate and capital structure in place, yet provide a more flexible and functional dynamic in terms of the management of the company. Specifically, we propose the following: Management Structure 1. FFG becomes a statutory close corporation in which John and Sayat will be the operating managers (“Management Committee”) responsible for all decisions normally reserved for the Board. a. John and Sayat will have equal voting rights. All decisions of the Management Committee will require unanimous consent, other than those that fall within the ambit of the day-to-day decisions of John (CEO and front of the house) and Sayat/Laura (kitchen). The close corporation structure would remain in place for so long as all three shareholders (John, Sayat and Laura) remain employed in the company and own stock in the company. b. We will need to designate a tie-break person and procedure to avoid potential deadlock on the Management Committee. c. To become a close corporation, the Articles will have to be amended, stock certificates legended, and a shareholders’ agreement entered into. 2. The board of directors will remain the same: John, Sayat and Laura. 3. The officers will remain the same--John (President and CFO), Laura (Secretary)--and Sayat will be appointed Vice President. Letter to Carolyn J. Tawasha, Esq. Page 2 of 3 Capital Structure 1. John has already paid for his $50,000 shares (@0.001 per share), and those shares are fully vested. John has too much at stake, including his home as part of the Lease guaranty, to leave before Noosh reaches financial success. 2. Sayat and Laura will be issued 25,000 shares each at the same price that John paid. 5,000 shares each will vest immediately upon execution and the balance of the shares will commence vesting June 1, 2018, with a one-year cliff and monthly thereafter for three years. a. We recognize that Sayat and Laura potentially have serious tax issues as a result of them not having made a Section 83(b) election. (The closing of the LLC unit offering—which is the only arm’s length valuation we have-- put the post-money valuation of Noosh at nearly $5 million.) Nevertheless, I believe we can resolve these tax issues favorably and John is willing to work with Sayat and Laura to achieve this objective. 3. FFG has the right to repurchase any unvested shares at the original purchase price in the event of Sayat and/or Laura’s termination of employment. FFG will also have the right to purchase any vested shares at fair market value. John does not agree to give Sayat and Laura a right of first refusal on each other’s shares in the event of termination, as this could create an unintended consequence where one spouse leaves his or her employment shortly after execution, yet the ownership percentage remains the same. On the other hand, if one spouse’s employment terminates due to death or permanent disability, John would agree that the remaining employed spouse could have a right of first refusal over the shares. Intellectual Property 1. John (individually) owns the IP related to Noosh, including the trademark. John will license this IP to the LLC to use on a royalty-free basis as long as the restaurant operates. John is free to open additional Noosh restaurants; as long as Sayat and Laura are employed by the original Noosh, they will have the right to participate on an equal basis provided that they contribute towards the opening of future location. If and when their interest in FFG terminates, their positions and any equity in the future locations will immediately cease. 2. Sayat and Laura own the IP related to Kitchen Table, including the trademark. However, in recognition of the fact that, to date, the Kitchen Table concept has been developed using the LLC’s funds, Sayat and Laura will license this IP to the LLC to use on an exclusive, royalty-free basis as long as the restaurant operates. This means that when they are stock in Noosh, they cannot use the Kitchen Table concept in any restaurant venture outside of the Noosh restaurant; provided, they may exploit the Kitchen Table IP in other channels (e.g., books, media, etc.) as long as such activities do not interfere with the performance of their duties to FFG and provided further that Letter to Carolyn J. Tawasha, Esq. Page 3 of 3 all proceeds with such activities are assigned to Noosh. In other words, they will be subject to a noncompetition provision during their employment with Noosh. If either Sayat or Laura’s ownership in FFG terminates, they will be free to open Kitchen Table restaurants (subject to a reasonable geographic limitation to be agreed upon by the parties) and retain all proceeds therefrom. 3. As part of their stock issuance, Laura and Sayat will provide and license to FFG all recipes and know-how needed to produce and execute the Noosh menu for so long as the restaurant operates. Employment 1. Employment Agreement -- Each owner (John, Laura and Sayat) will sign an employment agreement. 2. Job Responsibilities – The duties outlined in your revised Shareholders’ Agreement are generally acceptable. 3. Salaries -- Recognizing that Noosh is a start-up with the stated goal of returning investor funds as quickly as possible, starting salaries will be $60k each for John, Laura and Sayat, respectively, with a bonus structure to be worked out by the Management Committee if certain milestones are hit (both on the culinary and business sides). 4. Termination – The company will not have the right to terminate partner-employees at will, but it can terminate for “cause” (standard language including unlawful, dishonest deeds, failure to follow direction of Management Committee, etc., and failure to cure after written notice). 5. Activity Outside of Business -- Partners free to engage in outside activities provided there is no conflict of interest or competing activity and does not interfere with the performance of duties. * * * * Please review the above terms with your clients and give me a call at your earliest convenience to discuss. If the foregoing is satisfactory, the parties can sign an MOU and immediately being preparation to open the doors of Noosh, while the lawyers finalize the legal documents. Yours sincerely, Michael G. Schinner Enclosures cc: John Litz EXHIBIT B CAROLYN J. TAWASHA PC. ATTORNEY AT LAW Kay & TawasHa LLP 829 CLAY STREET OAKLAND, CA 944607 ctawasha@kaytawasha.com (510) 8388-3275 December31, 2018 VIA EMAIL & US MAIL Mr. Michael Schinner SCHINNER & SHAIN, LLP 96 Jessie Street San Francisco, CA 94105 schinner@schinner.com Re: FFG Restaurant Group, Inc. (“FFG”) Dear Michael: I have reviewed yourletter dated December 19, 2018 and the proposals contained therein with my clients. This letter is our response in an effort to resolve the major outstanding issues raised in yourletter. It is not an attempt to address all relevant matters. Please be advisedthat this constitutes a confidential settlement communication and is not admissible as evidence. For simplicity, the headings below are consistent with yourletter. Reference to the Shareholder Agreementis to the Shareholder Agreement drafted by FFG’s attorney Roberta Econamidis and as revised by me and sent to you on November28, 2018. Management Structure: 1, Laura and Sayat agree that the most practical structure for addressing management of FFGis to convert the companyinto a statutory close corporation and appoint a Management Committee, which will be responsible for decisions normally reserved for the Board of Directors. The Management Committee will have authority to act informally. 2. The members of the Management Committee will consist of the same persons who are Directors of the corporation. Directors will be appointed as set forth in the Shareholder Agreement per the terms drafted by Roberta. Accordingly, the members of the Management Committee will be John, Sayat and Laura. If for any reason, there are fewer than three shareholders, and consequently fewer than three Directors, the Management Committee will be constituted based on the number of remaining Directors. Sayat and Laura are not prepared to relegate Laura to a non-voting shareholder because John has determined he cannot work with her. Instead, decisions will be made by a majority vote of Management Committee members, LS_Doc_0981 Mr. Michael Schinner December 31, 2018 Page 2 although Sayat and Laura are prepared to provide that John must be one of the two members approving a decision so as to avoid his being outvoted by them. 3. The shareholder agreement will be generally based on the last draft of the Shareholder Agreement with added language addressing the Management Committee structure and any other revisions agreed bythe parties. 4, Wedo not see how a “tie-breaker” designate will work for all purposes regardless of the issue at hand, but please propose someoneso we can evaluate this more effectively and from a practical perspective. 5. Authority of the individual members/officers/shareholders to make day-to-day decisions would need to be refined to some extent and should betied to the shareholders’ respective duties as outlined in the schedule attached to the Shareholder Agreement. It appears John has agreed to those duties as identified. The items under Section 7 of the Shareholder Agreementas requiring approval of 75% of the shareholders would instead require a majority vote of the Management Committee, even if those items are otherwise identified under an individual shareholder’s duties. Laura’s and Sayat’s authority would include back of house butthe parties should also discuss front of house given that Laura and Sayat have assumed someof these responsibilities and John is not expected to be working in the restaurant on a full-time basis. 6. The Officers would be as follows: John, CEO and CFO; Sayat, Vice-President, Laura, Secretary. Capital Structure: 1, Laura and Sayat are prepared to also pay $.001 per share, $50 or $25 each, for each of their 25,000 shares. However, as I have indicated both in my revised draft of the Stock Purchase Agreement and to Roberta, I believe a total capitalization of $100 is too low and subjects the shareholders to potential individualliability based on undercapitalization. I would recommend a minimum of $3,000 to at least coverinitial attorney’s fees and accounting and tax expenses; Laura and Sayat are willing to pay $750 each for their shares. 2. Like John, Laura and Sayat have a great deal at stake in this venture. They personally guaranteed the Forward Food Group, LLC lease for its restaurant premises in addition to various vendor agreements, they significantly reduced the activities of their successful business in April 2018, have put that business completely on hold since August, 2018 and have each been devoting at least eighty hours a week for the last five months towards developing the concept, recipe and menu development, logistics, licensing and permitting, hiring and training, promotion and pre-openingactivities, not to mention their full-time and other efforts prior to that. For vesting purposes, they are willing to accept 5,000 shares each immediately, with 5,000 per year vesting monthly (per the terms drafted by Roberta in the Shareholder Agreement) commencing February 2, 2018, the day the restaurant lease was signed and they began their work for FFG and the restaurant in earnest. They will not agree to a one-yearcliff. LS_Doc_0981 Mr. Michael Schinner December 31, 2018 Page 3 3. While we disagree with your “post-money valuation” of $5 million for FFG, becausethis moneywas raised for the restaurant entity among other reasons, I agree that we should be able to resolve the related tax issues so that Sayat and Laura can take advantage of a Section 83(b) election. 4, Laura and Sayat would agree to the buy-out terms as outlined under item 3 of vourletter. 5. Westill need to understand the ownership interests of Forward Food Group, LLC and how FFG’s interest was affected by the additional capital raise conducted by John. Intellectual Property: 1, The proposal outlined in yourletter dated December 19, 2018 does not appear to be made in good faith. As John knowsand understands, the parties always intended that FFG would own the ““Noosh” intellectual property, including the trademark and trade names, recipes and menus. This was all developed on a collaborative basis with my clients devoting significant time and efforts to do so. As explained to me by Roberta, Sayat and Laura wereoriginally going to own equivalent fully vested interests in Forward Food Group, LLC and each newrestaurant entity formed under the concept so long as they continued to be involved, but the parties instead agreed that they would owna vesting interest in the entity which ownsthe intellectual property. There is no basis upon which they would agree to grant John ownership of the concept theyall developed together and accept a vesting interest they would otherwise have received as a fully vested interest. 2. Likewise, the “Kitchen Table” concept, including the trademark and trade name, recipes and menus developed for the restaurant should be owned by FFG. 3. All intellectual property owned by FFG will be subject to Sayat’s and Laura’s rights in their pre-existing property and intellectual property they develop outside of their work for FFG. Note that this is consistent with the terms of the Forward Food Group, LLC operating agreement. Weproposed language under Section 8 of the Shareholder Agreement addressing Sayat and Laura’s rights to pre-existing intellectual property. You expressed some concerns, so I am proposing revised language here given that resolving this issue is crucial to resolving any outstanding issues amongthe parties: “A Shareholder may not, at any time either during the term of this Agreemert or thereafter, directly or indirectly furnish or divulge to any person, firm, or corporation whatsoever, except as may be necessary for the fulfillment of Shareholder’s duties as an employee and officer of the Corporation, the names of any customer or customers of the Corporation or the methods of conducting the business of the Corporation. In addition, a Shareholder may not disclose any confidential information to any person, firm, or corporation whatsoever, imparted to a Shareholder in connection with employment of the Shareholder by the LS_Doc_0981 Mr. Michael Schinner December 31, 2018 Page 4 Corporation. Finally, subject to the terms hereof, a Shareholder may notuse fer its own benefit any confidential information imparted to a Shareholder in connection with employment of the Shareholder by the Corporation or any ofits Affiliates. The parties acknowledge and agree that Sayat and Laura have and will incorpcrate into the “Noosh” and “Kitchen Table” concepts (collectively the “Concept”) various pre-existing knowledge, concepts and other intellectual property or proprietary information, including, without limitation, menus, recipes, methodsfor food preparation and service and staffing models used in connection with their trademark and trade name “Jstanbul Modern,” cultural and social formats, ingredient profiles, ingredient combinations, know-how, techniques, methods, compilations, sources, ideas, designs and other general knowledge(collectively, the “Pre-Existing IP”). The Corporation agrees that Sayat, Laura and/ortheir affiliates, as the case may be,are the sole and exclusive owners of the Pre-Existing IP, retain all rights, titleand interest to the Pre-Existing IP and are free to use, explo‘t or dispose of such Pre-Existing IP, in whole or in part, in any way as they may desire, including, without limitation, in restaurants or other businesses that use adaptations of recipes or menusincorporated into the Concept. Notwithstanding the foregoing, Sayat’s and Laura’s ownership and use of the Pre-Existing IP, (a) shall not materially adversely affect the business of the Restaurant or any other restaurants using the Concept managed by the Corporation or its Affiliates, (b) shall not materially adversely affect Sayat’s and Laura’s ability to perform their Services while they are Shareholders of the Corporation, (c) shall not include the same menusas those developed for the Concept, and (d) shall not materially adversely affect the Corporation’s ownership of the Conceptor prevent the Corporation from using Confidential Information developed by Sayat and Laura in connection with the Services they render for the Corporation to develop the Concept even if such Confidential Information is similar to the Pre-Existing IP.” 4. The foregoing should address John’s concerns regarding FFG’s ownership of the Concept and related restrictions. Sayat and Laura will not agree to a non-competition agreement, whichis inconsistent with the terms of the Forward Food Group, LLC operating agreement in any event. 5. A license agreement for the Noosh and Kitchen Table concepts granting Forward Food Group, LLC the right to use them needsto bein place. Employment: l. Assuming the terms of the employment agreementare consistent with the terms in the Shareholder Agreement, Laura and Sayat would be willing to consider havingall three parties sign employment agreements. 2. Sayat and Laura agreedto initial salaries of $60,000 in order to keep the initial opening capital budget forthe first restaurant low and based on the prospect that they would be opening additional Nooshrestaurants relatively quickly and receiving salaries from those locations. If LS_Doc_0981 Mr. Michael Schinner December31, 2018 Page 5 cash flow from the restaurant can sustain industry standard salaries, their salaries should increase. Whileit is everyone’s goal to repay investors as quickly as possible, Laura and Sayat are not prepared to workin the restaurant indefinitely for a salary of $60,000 each. In the past whenthe budget and cash flow did not permit, they discouraged John from starting salaries for the three of them and they have received nosalaries to date; they are obviously not interested in jeopardizing the viability of the restaurant if cash flow does not permit an increase. The issue of past salaries and other compensation owedfor private events, as agreed by the parties, still needs to be addressed and resolved. A reasonable interim base salary for each Chef once the restaurant can sustain it would be $80,000 plus bonuses, whichis still below prevailing rates. Once restaurant cash flow permits, their salaries would then increase to industry standard. Thatsaid, salaries should be tied to actual services performed in and for the restaurant. If they take on more of a supervisory role as the concept expands, salaries payable by the initial restaurant and each affiliate would be adjusted accordingly. Likewise, if John outsources his services, his salary should also be adjusted so the restaurants are not paying twice. 3, The language we provided in Section 5.1 of the Shareholder Agreement defining a termination “for cause” is acceptable. Given your comments regarding John’s desire to terminate Laura or Sayat for “insubordination,” your reference to “failure to follow dizection” as a cause for termination is too broad, particularly if “direction” by the Management Committee is determined by a “tie-breaker designate.” It has becomeclear that the parties have had a number of frustrations working together so any standard for termination must be an objective one. 4. Giving the parties the rights to engage in outside activities as you propose in yourletter appearsto be fine but referencing a “competing activity” is too broad. Using the metric for Laura’s and Sayat’s use of their Pre-Exiting IP is more appropriate here (i.e. the shareholders’ activities may not materially adversely affect the business of the Restaurant or any other restaurants using the Concept managed bythe Corporation). 5. I assume yourreference to John’s full and immediate vesting and your references to his commitmentindicates that he does not wish to include a thirty-six month commitmentbefore a voluntary termination. This is acceptable (and more consistent with the terms of the Forward Food Group, LLC operating agreement) providedthe parties give no less than 90 days’ prior notice. Sayat and Laura wanted certain commitments from John before his interest fully vested but they would be willing to forgo that in an effort to move the process forward. Despitethis, it is still important to identify milestones and a reasonable timeline for expansion of additional units underhis duties, so they can better understand the benefit of having a vesting interest in the managemententity that ownsthe intellectual property. Your December19, 2018 letter refers to enclosures. If you intended to include enclosures, please provide them as soonas possible. Let me knowif you wish to schedule a time to discuss. In the meantime, please be advised that myclients are not hereby waiving anyof their rights or remedies, either at law or in equity. LS_Doc_0981 Mr. Michael Schinner December 31, 2018 Page 6 If we can come to an agreement and incorporate them into an MOU, I would suggestthat Roberta draft and revise the relevant documentsstarting with my last draft of the Shareholder Agreement and Stock Purchase Agreement. Very truly yours, . hf A oy (CV rolynJ. Tawasha ce: Laura Ozyilmaz Sayat Ozyilmaz LS_Doc_0981